Newmont Works In Ghana To Avoid Indonesia, Peru Pitfalls
By Heather Draper
Of DOW JONES NEWSWIRES -- 22 December 2005
DENVER (Dow Jones)--Newmont Mining Corp. (NEM) says it is working hard in Ghana to avoid the environmental and social mistakes it made in Peru and Indonesia, but the world's largest gold producer still has its critics.
Ghana, in Western Africa, is among Newmont's biggest hopes for future gold reserve replacement, a key measure used to value mining companies.
Chief Executive Wayne Murdy has said that Newmont, of Denver, can't afford to walk away from Ghana because of the large estimated gold reserves there, even though it poses the same socioeconomic and public relations risks as other developing countries.
To try to avoid some of the pitfalls it has encountered overseas - including an ongoing criminal trial over pollution charges in Indonesia - Newmont hired the University of Colorado School of Medicine to do health assessments in Ghana prior to starting operations there.
The studies found that disease and poor sanitation were already problems in many of the communities in Ghana near where Newmont wants to open two new open pit mines - Ahafo in 2006 and Akyem, which is still in the permitting phase.
Newmont expects to produce from 500,000 to 550,000 ounces of gold a year at Ahafo and 375,000 ounces a year at Akyem.
"We've learned a lot of things at all of our operations globally ... so as we started in Ghana, we focused on bringing our best practices to bear," said William Zisch, vice president of African operations for Newmont. "We're really working with the communities, and our environmental standards in Ghana will be as strict as anywhere we operate."
Still, bad news has trickled out of Ghana, including the shooting of a farmer by Ghana police in November during a protest of Newmont near its Akyem project. Newmont has said its only involvement in the incident was calling the police about the protest, which included a roadblock near the future mine site.
Ute Hausmann, the German coordinator of the human rights group FoodFirst Information and Action Network, or FIAN, said Newmont is spending a fair amount of time and resources on communication with villagers in Ghana.
"However, you cannot solve substantial issues through communication only," Hausmann said. "About 9,500 people have been displaced economically, which means they have lost access to land that they depend on for their livelihood."
FIAN is also concerned about the environmental effects the mines will have on water resources in the areas near the mines, she said.
Most recently, technical mining experts have raised concerns about Newmont's environmental assessments at Ahafo.
In a report by the Center for Science in Public Participation dated Dec. 9, scientists pointed out problems with Newmont's data in the Environmental and Social Impact Assessment it prepared for the International Finance Corp. in hopes that the IFC will help fund the project. The center, based in Montana, provides technical advice to grassroots groups on environmental issues related to mining.
Newmont used data averaging or admitted it had incomplete data in the Ahafo ESIA, the center's report said.
"It is sometimes unclear whether this 'averaging' is a product of lack of data or reporting, but it makes it impossible to accept many of the ESIA's conclusions," wrote authors Stuart Levin, a mining reclamation expert, and David Chambers, a geophysicist.
The report also asserts that Newmont "sometimes proposes to utilize significantly less stringent human health and environmental standards in Ghana than those it uses in the United States."
Neither of the authors could be reached for further comment Wednesday.
Newmont spokeswoman Heatheryn Higgins said the company hasn't seen the report so she couldn't comment on it.
"We understand they (the center) submitted it to the IFC and it's just part of the public comment process," Higgins said. "We're working with the IFC and will address any issues that arise in a responsible way."
Newmont's Zisch admits it will be hard for the company to avoid problems when it's starting mining operations in such a poor region.
"I can't deny that we have an impact when we come in and start a mine," he said. "Hopefully, that impact will be mostly positive, but we know there will be issues along the way."
One of the biggest issues he sees arising in Ghana stems from the high expectations of villagers there for jobs.
"We recently had 10,000 applicants for 600 jobs," Zisch said. "In a region like that, with its lack of resources, you have the potential to have a lot of people with high expectations ... and some who will be disappointed."
But unlike in Peru and Indonesia, Newmont is partnering with nongovernmental organizations in Ghana to try to do things better, he said. "NGOs understand the community and development ... We do mining and exploration, so it's better to partner with them," he said.
Newmont is working with the OICI (Opportunities Industrialization Centers International), the Ghana Wildlife Society and Conservation International, among others, he said.
Newmont has even flown tribal leaders from Ghana to Denver to meet with company executives and to Nevada to check out the company's operations there.
"The assets are here (in Ghana) and will have us here for a long time, and that's why we can commit to doing these projects in an environmentally sound and socially responsible manner," Zisch said. "We're going to be here for a long time ... and we're making a commitment up front to do it right."
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